1. Rural Outlook Conference US and Oklahoma Economic Outlook Presentation October 2015

2. Rural Outlook Presentation October 2015 Agenda Status of the US Economy –Storyline Retrospective –Major Indicators Monetary Policy –Fed’s Balance Sheet –Money Supply Growth Special Topics –Status of the Oklahoma Economy Employment Trends—State and Regional Unemployment –Price of Crude Oil & Employment Implications

3. Storyline and Continuing Saga 19 th Year and Counting

4. First Chapters of Story Irrational Exuberance Stock Market Bubble/Bust Floods of Liquidity Promoting Speculation and Low Rates Rise of the Housing Bubble Recession of 2001

5. Greenspan “Put”: Expand the Money Supply in the Face of any Financial Trauma 1987 Stock Market Crash –Solution—Add liquidity 1990 Gulf War –Solution—Add liquidity Mexican Financial Crisis –Solution—Add liquidity Asian/Russian Financial Crisis –Solution—Add liquidity Long-Term Capital Market Collapse –Solution—Add liquidity Y2K Problems –Solution—Add liquidity Stock Market Collapse –Solution—Add liquidity 2001 Recession –Solution—Add liquidity 9/11 Attack –Solution—Add liquidity Has Greenspan created MORAL HAZARDS?

6. Next Chapters of Story Subprime Mortgage Crisis Financial Contagion Recession of 2007-2008 Fiscal & Monetary Stimulus Housing Market Collapse Muted Economic Recovery

7. The Continuing 19-Year Saga Credit Market Deleveraging Sovereign Debt Crises Currency Devaluations Global Political Discord Quantitative Easing Forever Demographic and Other Cliffs Continuing Slow Growth

8. Status of the National Economic Recovery “Nobody can predict how long governments can get away with fake growth, fake money, fake financial stability, fake jobs, fake inflation numbers and fake income growth.” Paul Singer, Eliott Management, $8.6B AUM Paul Singer, Eliott Management, $8.6B AUM

9. Real Annualized GDP Growth Recent Estimates place Q1 2013 at a 1.6% gain

10. Industrial Production

11. Retail Sales

12. Year-over-Year Change in U.S. Non-Ag Employment

13. Purchasing Mgrs Index and Fed Manufacturing Surveys Recent Estimates place Q1 2013 at a 1.6% gain

14. Case Shiller Housing Price Indices

15. Housing Starts

16. Inflation

17. Monetary Policy Federal Reserve gone wild?

18. Fed’s Magical Balance Sheet

20. Federal Reserve’s Asset Holdings

21. Stock Market and Member Bank Reserves

22. Bank Reserve Balances Deposited at the Fed

23. U.S. Government Budget Balances

24. Status of the Oklahoma Economy

25. OKC, Tulsa, BOS Employment Trends

26. US and Oklahoma Employment Growth

27. Comparative State Unemployment Rates

28. Price of Oil Houston, we have a problem!

29. WTI: What Happened in the 1980’s

30. WTI Historic

31. Historic U.S. Oil Production

32. US Historic Rig Count

33. Oil v. Natural Gas Rig Count

34. Oil Prices and Rig Counts

35. OK Direct Mining Sector Employment

36. OK Regional Direct Mining Sector Employment

38. That’s all, folks